Weekly SmartPills #65

Financial Markets

This week, the cryptocurrency market experienced significant volatility, influenced by President Donald Trump's announcement of a "Crypto Strategic Reserve." The reserve aims to include cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Cardano (ADA), and Ripple (XRP), positioning the U.S. as the "crypto capital of the world." Following this announcement, Bitcoin briefly surpassed $80,000, while Ethereum reached $2,200. However, both cryptocurrencies underwent corrections later in the week: Bitcoin closed at $82,784, down 4.09% from its weekly high, and Ethereum ended at $2,044.69, an 8.07% decrease from its peak.

Traditional financial markets showed modest gains this week. The SPDR S&P 500 ETF Trust (SPY) closed at $575.92, marking a 0.55% increase over the previous week. Similarly, the Vanguard FTSE Europe ETF (VGK) rose by 1.47%, ending at $73.34. These movements suggest cautious optimism among investors, despite ongoing global economic uncertainties.

Economics and Regulation

Donald Trump has temporarily paused most tariffs on Mexican goods and some from Canada for at least four weeks, following backlash from businesses and financial markets. However, 62% of Canadian imports remain subject to a 25% tariff due to non-compliance with the USMCA trade deal. The reprieve will end on April 2, when the administration plans to impose additional tariffs, including those on the auto industry. The move follows concerns over the economic impact, as markets reacted negatively, with the dollar weakening and US stock indices falling. The European Union is expected to be the next target for tariffs, with potential retaliatory measures on the horizon.

The eurozone economy grew by 0.2% in the last quarter of 2024, with the EU's GDP increasing by 0.4%, supported by household spending. However, major economies like France and Germany saw contractions of 0.1% and 0.2%, respectively. Italy's GDP inched up by 0.1%, while Ireland saw a strong rebound with 3.6% growth. For the full year, eurozone GDP grew by 0.9%, with the EU expanding by 1%. The European Central Bank is expected to cut deposit rates further in April and June after a recent 25-basis-point reduction to 2.5%, while Germany's plans to reform borrowing limits may impact future monetary policy.

Blockchain and Innovation

This week, we highlight the launch of Reploy (RAI), an Ethereum-based platform for developing large language models (LLMs). According to BeInCrypto, Reploy has seen a 15% increase in the last week due to increased adoption. This project aims to facilitate the development and deployment of decentralized AI applications by offering advanced tools for developers in the blockchain space.

Trends and Statistics

What portion of gross salaries do European earners pay in taxes?

• In 2023, a single worker without children in the EU paid an average of 17.3% of their gross salary in income taxes, ranging from 3.2% in Cyprus to 36% in Denmark.

• A two-earner couple without children paid an average of 17.1%, with Denmark at 35.5% and Cyprus at 3.3%. A one-earner couple with two children had an average tax rate of 8.1%, with negative tax rates in Slovakia (-14.1%), Czechia (-6.5%), Poland (-1.1%), and Germany (-0.2%).

• A two-earner couple with two children paid 14.6% in taxes on average, ranging from 1.3% in Slovakia to 35.5% in Denmark.

• Denmark consistently had the highest tax burden across all categories, while Eastern and Southern European countries had the lowest.